Abstract Deficiencies in the IL-7 signaling pathway result in severe disruptions of lymphoid development in adult mice. To understand more about how IL-7 deficiency impacts early lymphoid development, we have investigated lineage restriction events within the common lymphoid progenitor (CLP) compartment in IL-7 knockout mice. This revealed that although IL-7 deficiency had a minor impact on the development of LY6D− multipotent CLPs, the formation of the lineage restricted LY6D+ CLP population was dramatically reduced. This was reflected in a low-level transcription of B-lineage genes as well as in a loss of functional B-cell commitment. The few Ly6D+ CLPs developed in the absence of IL-7 displayed increased lineage plasticity and low expression of Ebf-1. Absence of Ebf-1 could be linked to increased plasticity because even though Ly6D+ cells develop in Ebf-1–deficient mice, these cells retain both natural killer and dendritic cell potential. This reveals that IL-7 is essential for normal development of Ly6D+ CLPs and that Ebf-1 is crucial for lineage restriction in early lymphoid progenitors.